Ladies and gentlemen, good day, and welcome to the Q1 FY 2023 earnings conference call of Brigade Enterprises Limited. We have with us today on the call the management of Brigade Enterprises Limited. As a reminder, all participants' lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. M. R. Jaishankar, Chairman and Managing Director of the company. Thank you, and over to you, sir.
Thank you. Good afternoon, ladies and gentlemen. Welcome to the Brigade Enterprises Q1 financial year 2022/23 earnings call. I'm joined by our executive directors, Mr. Roshin Mathew, Ms. Pavitra Shankar, Ms. Nirupa Shankar, and Mr. Amar Mysore. Our senior management is also present, Mr. Atul Goyal, CFO, Mr. Vineet Verma, CEO, Hospitality, Mr. Karthi Baskar , COO, Industrial Parks and Logistics, Mr. Om Prakash, Company Secretary, Mr. Viswa Prathap Desu, CFO, and Mr. Pradyumna Krishna Kumar, Senior VP, plus a few other people. It gives me great pleasure to report that the positive momentum sustained into the first quarter of this financial year. Demand continued to be robust, driven by strong sales in the residential sector, pickup in the leasing business, and a bounce back in the hospitality and retail verticals.
We expect the momentum to carry through to the rest of the financial year, provided there are no major upheavals in the global political situation. Although there are talks of recession in America and Europe, we feel the Indian economy can remain resilient. Some of our business highlights, starting with our residential business, registered net new bookings of 1.13 million sq ft with a value of INR 743 crore in Q1 of FY 2023. This corresponds to a growth of 50% by area and 58% by value over Q1 of the previous financial year, 2022. We effected a further price increase in Q1 because of the higher cost pressures driven by global macroeconomic factors. This has been accepted by our customers, a testimony to the strength of our brand and continued positive buyer sentiment.
Last weekend, we hosted our annual flagship event for the 15th time, popularly known as Brigade Showcase, held physically at the Sheraton Grand at Brigade Gateway. It is for the first time since 2019. After COVID in 2020 and 2021, we had not held a physical Brigade Showcase. We had a promising number of footfalls with serious buyers, as a result of which we closed a good amount of business over three days. We had a number of innovations this year at the Brigade Showcase, including an all-digital screen experience, mock-ups of our interior brand, Brigade Plus, and special offers, including foreign trip giveaways and iPhone for every booking. We also launched approximately 1.5 million sq ft of new projects during showcase, namely Pearl at Brigade Atmosphere, Brigade Horizon, Brigade Nanda Heights, and Emerald at Brigade El Dorado.
We launched our first plotted development, Neem Grove, at Brigade Orchards, which has been very well received by customers. We also launched a new tower called Iridium at our Brigade El Dorado 50-acre mixed-use township in the Aerospace Park in North Bengaluru. Our exceptional performance in collection continues. Q1 collections was INR 867 crores. Moving on to our office business. Occupancies across offices is at a two-year high, and office absorption saw a threefold rise as compared to last year. We leased 0.41 million sq ft, which is 410,000 sq ft this quarter, almost double compared to the Q1 of FY 2022. With occupiers in an active state, our forecast for the next two quarters looks positive.
Brigade Tech Gardens in Brookefield in Bengaluru East attracted a lot of inquiries, leading to closures and emerged as the highest contributor to our portfolio, leasing 300,000 sq ft in quarter one. Another marquee development, Brigade International Finance Center at GIFT City, known generally referred to as BIFC, Gandhinagar, saw good traction and is expected to be fully leased within the next quarter. Ongoing demand is from players in automotive, IT, pharma, BFSI, and flexi-office sectors. Collections of the portfolio remains stable at 99.7%. You will be happy to know that when Prime Minister Modi inaugurated last week the SGX exchange, you know, International Bullion Exchange and the JP Morgan, all these offices are located in our BIFC. The retail business saw a 28% growth in retailer consumption over quarter one financial year 2020, which is pre-COVID.
We saw a good leasing traction across all categories, particularly in family entertainment centers, referred to as FECs, and food and beverage restaurants. We leased 112,000 sq ft this last quarter, including 40,000 sq ft for the family entertainment center for a marquee operator in Orion Mall at Brigade Gateway. Compared to the previous quarter, electronics saw an 11% growth in sales, food and beverage a 49% growth in sales. Multiplexes saw a 117% growth, and FECs, family entertainment centers, saw a 97% growth respectively. Coming to our hospitality business, it has shown remarkable turnaround in quarter one, registering the best quarter ever. Our hotel portfolio saw an occupancy, average occupancy of 31% for the quarter, compared to 49% last quarter.
I must mention that, you know, in January 2020 only we launched Grand Mercure Gandhinagar. That is why the, you know, the percentage is less 31%. If you eliminate Grand Mercure Gandhinagar and Four Points by Sheraton in Kochi, the remaining six hotels saw an average occupancy of 80%. Average room rates were at INR 5,300 compared to pre-COVID INR 3,900. Overall revenues was 33% higher than pre-COVID levels, and adjusted gross operating profit, AGOP, 35% higher than the quarter one of FY 2020. Our revenue for the quarter touched INR 80 crore for the first time. The vertical was cash positive even after taking into account depreciation and interest.
This quarter we have added 75 acres to our land bank in the KIADB, which is the Karnataka Industrial Areas Development Board of Bangalore, near the Aerospace Park phase two, in which we'll be evaluating a mixed-use development of office or industrial parks and logistics, office and residential. We will share further details once the design approach has been finalized. We strongly believe in the growth prospects of North Bangalore, given the continued investment in transport infrastructure and connectivity to the city and the presence of Bangalore International Airport. That brings me to the end of our business highlights. Thank you for listening. I now request Atul Goyal, our CFO, to take you through the financial highlights. Take care and stay safe. Jai Hind.
Thank you and good afternoon, everybody. On behalf of the company, we would like to welcome you to the earnings call of Q1 FY 2023. CMD has already given updates on operational highlights. There has been overall improvement in all segments of the business during the quarter. Coming to consolidated financial performance for Q1 FY 2023, the consolidated revenue for Q1 FY 2022-2023 stood at INR 920 crores versus INR 391 crores for same quarter last financial year, increase of 135%. The consolidated EBITDA, including other income for Q1 FY 2023, stood at INR 250 crores as against INR 120 crores in Q1 FY 2022, an increase of 109%. EBITDA margin, including other income, stood at 27% in Q1 FY 2023.
Consolidated PAT stood at INR 65 crore compared to loss of INR 86 crore for the same quarter last financial year. Consolidated PAT after MI was INR 88 crore compared to a loss of INR 40 crore for same quarter last financial year. The real estate segment clocked a turnover of INR 665 crore and EBITDA of INR 86 crore in Q1 FY 2023. The leasing segment clocked a turnover of INR 175 crore and an EBITDA of INR 136 crore in Q1. Hospitality segment clocked a turnover of INR 90 crore and an EBITDA of INR 29 crore in Q1 FY 2023, achieved positive EBITDA during the quarter owing to higher occupancy ARR upon resumption of business travel. Coming to debt and liquidity position of the company, there was a reduction of INR 59 crore in real estate debt in Q1 FY 2023 because of good sales and collections.
Company gross debt as on 30th June 2023 is INR 4,095 crores. The cash and cash equivalents stood at INR 1,689 crores as on 30th June 2022. Consequently, company's net debt outstanding as on 30th June stand at INR 2,406 crores, out of which fair share is INR 1,635 crores. Eighty percent of the gross debt pertains to commercial portion of which 75-73% is backed by rental income. Of that, it's still at 7.75% despite the 90 bps repo rate hike by RBI. Net equity stood at 0.66. Cash flow from operating activities stood at INR 369 crores, an increase of 157% from same quarter last financial year. We have projected net operating cash inflow of INR 2,212 crores from the ongoing project and stock sales.
We have a strong equity position to support future expansion plans. I will now hand it over back to the moderators for the questions. Thanks.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, please press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Anyone who would like to ask a question, please press star and one at this time. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Adhidev Chattopadhyay from ICICI Securities. Please go ahead.
Yeah. Good afternoon, everyone. Am I audible?
Yes, you are.
Yeah, you are audible.
Yeah. Firstly, congratulations to the team for. Great to see the rental and hotel businesses finally seeing a recovery now from this quarter onwards. First question is on the rental business. Now, this, whatever leasing you have done in Brigade Tech Gardens and GIFT City, where will the rentals start flowing from this leasing? In the one year specific pipeline, could you just break up in which across which properties the maximum pipeline would be over here? What is the leasing target for the year now? Thank you.
Good afternoon. Basically, you asked me about the rental commencing. Typically, most of the tenants are asking for about six months of rent-free period on average. This can vary in some cases by a month or two, but on average, they are now asking for six months of rent-free period to do their fit out. Most of the area that has been leased has come from Brigade Tech Gardens, followed by GIFT City, and then we've done leasing in WTC Kochi and also some leasing in Brigade Opus. In the coming year, as we have mentioned before, the target has been to lease out all our existing available spaces, which is approximately 2 million sq ft. Our target is to achieve that, and we are still on track to do so.
We have a healthy pipeline over the next two quarters, and hopefully we'll have equally or better results in the coming quarter. Again, if you look at it, Tech Gardens will be the main focus followed by the
Okay. Okay, fine. Secondly, on our hospitality business now, obviously, this last quarter has been a great quarter for the industry. In July, and basically on the forward bookings you're seeing for the next two, three months, how do you see the overall year shaping up? Are you seeing some softness in demand now because of global macro, or are you seeing the momentum continuing to grow?
No. Basically, we are seeing the momentum continue because most of the business that we are getting is from domestic travel. We are also getting a lot of business in the MICE segment, which is the, you know, residential conferences. A lot of the pharma companies, medical companies, IT companies are all having a lot of conferences. There's also a lot of new joinees. There's been a lot of hiring that the IT services and financial services companies have had. They're having a lot of programs for their new joinees. We are seeing a sustained revenue in terms of occupancies and ARRs are quite high. In fact, July, August, and the coming quarter is projected to be quite robust as well.
Okay. Would it be right to say that the second half of this year, right, hotels perform even better than the first half? Is it, right assessment or it's still too early, any of you to comment?
If there are long weekends, then the business hotels actually take a dip in the occupancy, but the leisure hotels do better. When you have clear months, like this time, for instance, November is a clear month, Diwali, Dussehra comes in October, so then the occupancies are projected better for business hotels. If there are long weekends, like I said, the leisure business, the leisure hotels actually do better. Also there are a lot of wedding dates. The occupancies increase in the second half of the year. There are very auspicious dates, which create an additional demand for the residential and the social side of the demand.
Sure. Sure. The final question is on our outstanding land payments. Obviously the largest ones would be the Mount Road in Chennai and the KIADB land which we have tied up. If you'll now let us know for the rest of this year, what will be the land payments or land outgo we are expecting?
I think overall you can keep about INR 900-INR 1,000 crores, which includes the lands we are yet to register from TVS in the Mount Road, Chennai, then Pfizer and the KIADB land. The few other joint developments also we've entered into. Approximately you can keep it as INR 1,000 crores. INR 1,000 crore for the remainder.
Fine. That's it from my side. I'll come back in the queue if I've got more questions. Thank you.
Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address questions from all participants, we request you to please submit your questions just two at a time. Should you have a follow-up question, please rejoin the queue. Thank you. The next question is from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.
Hi, sir. Congratulations on a good quarter. Sir, you said INR 1,000 crore will be the land payment to be done in FY 2023. That's the amount which is currently outstanding as payable. The entire payment which is due right now, so it will be done in FY 2023 around that?
Say again. It is FY 2023, except in the case of KIADB, they need to comply with a few formalities. If the formalities are done before December, it will get into this financial year. If the formalities are slightly delayed, then it may move into the first quarter of next year.
How much is the amount which is due to KIADB?
INR 150 crore.
INR 250 crore?
About INR 150 crores.
Okay. The second question is on the gross development value addition during the quarter. If you can touch upon, because we see lot of land getting added on the ground. I know that mix is like commercial to JDAs land which is getting reflected in the payables. What's happening on the joint development side, so which is not getting reflected here. What kind of GDV from the JDAs have you already locked in? If you can just break it up in million square feet across geographies like Bengaluru, Chennai, the latest ones.
We have finalized about 6 million sq ft of JDA in Chennai, of which 2 million sq ft area is already JDA registered and signed. Another four million sq ft is in an advanced stage of you know due diligence, which should happen say sometime in hopefully in the quarter two. Otherwise it may get pushed to October. We have also finalized another two million sq ft very recently in Bangalore. All these things are yeah incorporated. Will be incorporated. What is signed post thirtieth June will get incorporated in the subsequently, or what is signed before is already taken into records.
Since the INR 2 million in Chennai has already happened, that is a part of your one. What is your FY 2023 number? Forty-
Originally I said about INR 9 million-INR 10 million in Chennai.
Yeah.
In the last quarter last earnings call. Out of that, everything is on track. Only the 4 million sq ft is in advanced stages of legal due diligence completion. For post-30th June, we have signed 2 million sq ft joint development agreements, you know, after the June 30th, 2022.
INR 9 million which are like INR 2 million has already happened. Four million is in advanced stages, so that takes it to INR 6 million in Chennai. Another INR 2 million has happened in Bengaluru. Total is about INR 8 million then.
Yes. Yes. Correct. Correct.
For rest of the year, sir, anything, because Bengaluru is the large part of our portfolio.
Rest of the year, we are hoping to complete about another 5 million sq ft of area, if not more. We are hoping. It all depends on, you know, our finalization of deals and then our due diligence, whether it will get completed on time or whether it will take a longer period. It depends on that.
Okay. Just the last question, sir, on this, TVS property. Have you finalized anything? Because last time you said contemplating what to do here. If you can just help us, when are we expect to close this deal and, when do you expect to bring this in market and what will be the likely configuration here?
Yeah. See, it is, it's going to be a mixed-use development with maybe 55%-60% residential and about 40%-45% office and some amount of retail. It faces Mount Road, which has got the metro connection right out of the gate. Subway metro connection. It also faces another very important road called Whites Road . It has got the advantage of both the roads. It is an ideal location for mixed-use development.
What will be the total area, developable area here, sir?
Total area will be upwards of 1 million sq ft.
Okay. Sure, sir. Sure.
It should add overall on a sale basis anywhere between INR 2,500 crores-INR 3,000 crores of revenue on a full project completion basis.
On the residential, you're saying. Residential will add about INR 2,500 crores to-
No. Residential and office also. Office, it depends whether we'll keep it as lease or whether we'll lease and sell. All those things it depends. The residential alone should give us nearly INR 2,000 crores of revenue.
Wow. Okay. Just last thing, sir. We had our residential CEO leaving the organization a couple of months back. Any thoughts on that, and if you can highlight who will be replacing?
Repayment is under review, but it has not affected our business one inch, and so it has no issue.
Okay. Sure, sir.
We have the right team in place.
Okay. Thank you, sir.
Sometimes all these positions are good to have, but, you know, even without that we can manage.
Sure. Thank you.
Thank you. The first participant, please limit your questions to two at a time. The next question is on the line of Pritesh Sheth from Motilal Oswal . Please go ahead.
Hi, sir. Thanks for the opportunity, good to see a strong recovery in hospitality. Question related to that. Firstly, a suggestion maybe, you know, if we can start again disclosing hotel-wise revenue, occupancy and, you know, ARR numbers, that would be very much helpful in terms of seeing what the situation, you know, how it is progressing. You know, another question is obviously looking at the recovery in the business. A few hotels we had stopped, you know, in terms of being stopped as plans in terms of shelved two hotels. Any revival in those plans?
For the one in Mysore, where the structure was already up just before COVID or during COVID, that we are restarting from the month of October. Whereas, the one in Brigade Tech Gardens, which was supposed to be Novotel Suites, we have repurposed it into residential apartments. The one near the airport, which we were to start, we have still kept it on hold. We may revive. We have all the approvals. We may revive. The one in Chennai, which was the Marriott Residences, it is under construction. We still have the time to decide whether to make it into Marriott Residences, which are serviced apartments, or sell them as, you know, apartments. That's a decision we may take in the next quarter.
As I said, one hotel will be restarted. One is already repurposed. Another, we have kept it on hold. We may start in three to six months. The other one is yet to take a call whether to sell a serviced apartment or regular apartment.
Got it. That's helpful. Secondly, on this KIADB and your logistics warehousing venture. We are signed up for 44-acre, you know, land parcel. What's the strategy there? It will, you know, be purely an opportunistic business right now at this stage, or we have definite plans of reaching a scale maybe two to three years later and, you know, have some targets in mind on that. Whether it will be, you know, build and sell model or are we looking at purely leasing or mix of it? Anything you can highlight on that?
You see, it is very well located, just 10 minutes from the international airport, so it has got a great potential. For us to fully get the possession of the land, it may take, as I mentioned, three to six months. The master plan exercise is just, you can say, commenced, and it'll take us maybe another three to four months to close the master plan exercise. Then it'll take at least 10-12 months to get all the approvals. Because it requires environmental approval itself will take 10 months. The commencement of the project will be sometime in Q4, maybe Q4 of FY 2024 and not earlier.
The residential will be sold, whereas the office, industrial park and warehousing will be on lease basis. That is the fact that it is a mixed-use development. It makes the project feasible with residential and more financially attractive. With the cash flow coming from residential, it can definitely support the industrial park and logistic business.
Got it. How are we looking to scale up this business from here on? Are there any similar land parcels already there in mind and, you know, that will continue to get added? Like you provided a visibility on your residential business, any visibility we have on the logistics warehousing industrial business overall?
Yeah, yeah. Amar Mysore will answer.
Hi, this is Amar . What we're looking at greenfield projects as well. At the moment we're looking at a few in the Hoskote corridor. Also we are looking at Chennai. To begin with, we'll start with lands which are operating where we already have operations whether it's Bangalore, Chennai, Hyderabad. Later we will look at other cities. To answer your question, we'll look at other opportunities as well, where we will acquire the land and aggregate it. That may take a little longer.
Sure, sure. I have two questions on that, but I'll take it off. Thanks. That's it from my side. All the best.
Thank you.
Yeah, thanks.
Thank you. The next question is from the line of Guneet Singh from CPICM. Go ahead.
Hi. I would just like you to share your guidance for the coming year in terms of top line and bottom line. Also, I would like to know what would be the growth drivers for the year going forward. Do we have any other projects in the pipeline or what is the pipeline that we have? What is the maximum revenue in terms of your projections that we can reach if we you know if we're able to achieve what we are expecting in terms of a pipeline? I want to know about. Certain forward-looking, say, projections that you have internally for the company.
Generally, as we have mentioned it several times, we refrain from giving a forward-looking guidance. We have also said that we are aiming at a 20%-25% growth in our revenue, if not more, though the aim will be to achieve more. It is subject to various factors, whether launches or macroeconomic conditions and et cetera, et cetera. Residential will certainly expected to contribute more. Also the office. All sectors, I would say. The retail cannot very substantially improve because we don't have new malls coming up. You know, office will certainly lease rentals will go up. Also the hospitality, which has already shown a turnaround.
Now, that is likely to sustain subject to unforeseen circumstances like whether it is due to COVID or monkeypox, any other war-related things. If there is a travel restrictions, it may affect. Otherwise, we don't think our hospitality business will be affected in any way. That's why we are, as I mentioned, 20%-25% growth, if not more, we are aiming at.
That is a conservative figure from end?
Yes.
All right. Thank you.
Thank you. The next question is from the line of Amanjit Singh from Ambit Capital. Please go ahead.
Thanks for the opportunity. Firstly, can you talk about increasing competitive intensity in the Bengaluru micro market, given new developers are coming in? Also you mentioned about hiring of new CEO for the residential business. Can you also update us on senior level hiring for your commercial segment? Do you think these headwinds cumulatively could impact the annual internal growth rate target of 20%, which you have over the next three to four years?
See, our commercial CEO is already a CEO. COO is already recruited. They will be expected to report in couple of weeks. Whereas the residential CEO, I did mention, it is work in progress. It should happen maybe by end of the quarter, this quarter or early next quarter. As I said earlier, the team is geared up without the CEO also. We also have Executive Director Pavitra Shankar, who is closely involved in residential business.
Sure. Any initial comments on if you are seeing the competitive intensity increasing, given new developers are expanding within the Bangalore micro market?
They are welcome. The market is big enough for everybody. They are welcome to expand. Bangalore developers are also going to Mumbai. Every person, many Bombay and Delhi developers have entered Bangalore and packed their bags and left. Let us see what happens in this case.
Sure. My second question is on the hospitality segment. With recovery now visible and you remain fairly confident on improving it further. Any plans on update on monetization or you will still wait few quarters before considering or evaluating the same?
See, like, two years back, things were going to happen. Now that the sector is revived, people are chasing us. It is up to us to see the way to decide on the right timing. To decide is not wise. To procrastinate for too long also it is not wise. We will take a call at the appropriate time based on the valuation we receive.
Sure. One lastly. Any update on the 1.5 million sq ft of land acquisition Hyderabad, which was underway, you had highlighted in the previous call?
It is work in progress. Hyderabad, the due diligence issues are much more. I don't want to make any commitment. The due diligence are much tougher in Hyderabad than compared to Chennai or Bangalore.
Sure. That's all from my side, and all the very best. Thank you.
Thank you. The next question is from the line of Parvez Akhtar Qazi from JLL . Please go ahead.
Yeah, good afternoon, sir, and thanks for taking my question. Congratulations on the great set of numbers. Couple of questions from my side. First, you said that we took a price increase in Q1. What was the quantum of the price increase taken, and how do we see, you know, overall pricing going ahead in the light of increase in mortgage rates and, you know, over the last one and a half year, there's been a bit of price inflation overall level. How do we see that going ahead?
Yeah. Hi, Parvez, it's Pavitra Shankar here. I'll answer that question. At the beginning of the financial year, we actually took a pretty big price jump of around 5%-8% across the portfolio. That was also coming off the back of an additional price increase, which we had done at the end of Q3, beginning of Q4. Definitely it did have some kind of impact in April, the first couple of weeks. We actually did not see too much momentum in our sales. Fortunately, I think once the customers also realized that, you know, this is something that we are particular about doing, even that's really reflected in our numbers, even in the movement of ongoing and completed inventory.
I think it's been well accepted because what we've seen is a trend towards consolidation and towards developers who are trusted and will deliver on time and with quality. Therefore, we think we are in a position to command a price increase, and of course, in the environment of increasing input costs, you know, increase. On the impact from increasing interest rates, thus far we have really not seen anything. Of course, if they continue to increase rates, we could see some kind of effect. I've also been maintaining that it may not necessarily change how much is absorbed. It could impact the type of inventory that is absorbed, which is the opposite effect of what happened during COVID and the pandemic when interest rates decreased.
We didn't see so much of an increase in buying, but rather from like a two-bedroom to a three-bedroom because of the increased affordability. I think first we will start to see that impact, and maybe the demand for very large sized units or larger units may actually get rationalized a little bit before the overall exuberance in the real estate or in the residential sector really changes dramatically. We are quite confident. All of our new launches have been very well accepted despite having pretty hefty price increases right in the beginning of the launch cycle itself. We're quite confident of the coming quarters.
Sure. Thanks. A couple of data-related queries. What would have been the share from Hyderabad and Chennai towards pre-sales this quarter?
This quarter not much because we're at the end of the life cycle of our Brigade Citadel project. By area, about 6%. It did come down from more than double that over a year ago. We just have a few remaining units to sell in Brigade Citadel.
When can we expect, you know, another launch in both of these markets?
In Hyderabad, we actually have two more projects, about 0.85 million sq ft, which we said will be launched within the next three to four quarters. All our launch projections are on a rolling four-quarters basis, so we are working on that. For Chennai, as our chairman had mentioned, we have signed up new lands. Those are the ones that are in various stages of due diligence, design and so on. Those have not yet come into our rolling four quarters projections, but that is definitely on the cards. Just to sort of close that loop, Chennai this past quarter was around 14% of our area, which has remained consistent over the last year.
Sure. Just one last question for Mr. Atul Goyal. What was the rental income from BTG and WTC Chennai this quarter?
The rental income from BTG, that is BTG, was around INR 27 crores. From Chennai it was INR 29 crores.
Sure. Thanks. That's it from my side, and all the best for today.
Thank you.
Thank you. The next question is from the line of Siddhant Dand from Goodwill. Please go ahead.
Yeah, hi. In, you know, you mentioned about monetizing. Now you're getting offers in the hospitality segment to monetize it. Are all our hotels, you know, available for sale or, you know, will it be like hotel-wise or, you know, the ones that are performing well or not performing well? What's the outlook over there?
This is Nirupa here. The idea is to actually do it as a portfolio. You know, we remain bullish on the hospitality front, so it's not that we're looking for a complete exit. If we do investor, it will be for a stake sale in the portfolio. We don't believe that it's the right strategy to allow investors to cherry-pick the hotels. I don't think it's in the best interest of the portfolio. It will be on an entire portfolio. That's what we're looking at.
Okay. That's perfect. Could you give a ballpark range, you know, just, you know, what kind of valuation are we expecting for the hotel?
We'll share the good news once we have an investor.
Okay. No issue. Actually I had one more question. Are we looking at in our leasing business of offices, you know, to do a similar thing or not right now?
In the office portfolio, we're not looking at it at a portfolio level. There we're looking at it at a project level because we are looking for financial partners to help us grow that business. Ideally a financial partner who will come in as a greenfield stake, so we can procure large parcels of land together and expand. Here in this case, we are looking at it at a first set of project level, and then we can always expand that multiple projects at a time.
Okay. Perfect. Understood. Thank you.
Thanks.
Thank you. The next question is from the line of Mohit Agrawal from IIFL. Please go ahead.
Mohit Agrawal from IIFL. Your line has been unmuted. Please go ahead with your question.
Yeah. Am I audible?
Yes, you are.
Yes. My question is on your warehousing queries. You know, just trying to understand that the idea behind getting into this, is it more opportunistic or do you think this will kind of support longer-term growth in terms of volumes? Or you think that this will yield higher or similar IRRs to residential business? What is the thought process behind getting into the warehousing business?
Yeah. This is Amar here. The reason why we explored this is because it gives a lot of potential for us to grow and also diversify our business. Some of it will be opportunistic. There's a lot of RFPs in the market and we would like to see if we can bag one of these. Basically you're seeing a lot of e-commerce penetration in the market. As a consequence of that, warehousing also there's a lot of demand, and Grade A is what we're looking at.
Would this have similar IRRs as your residential business? Any color on that?
No, no. This will be a lot lesser. Since we are looking at a mixed use, it will kind of each one will complement each other.
Okay. Sure. My second question is, you know, Atul just gave the numbers for the rentals from WTC and BTG, INR 29 crore and INR 27 crore. How much is, like, based on the leasing that you have done so far, which is 1.9 million sq ft and 1.5 million sq ft in WTC, how much rental is due, and, you know, versus how much you are collecting? In what time, in about six months should we start to see that kind of rentals coming in? Also, connected to that is how much more LRD can we take based on the rentals that are gonna come in, based on the leasing that you have done so far?
The rental, as Nirupa said, it takes six months for the fit-out period. Overall, if you see in Tech Garden and Chennai, we should close around INR 130 crores of revenue by the year-end. 120 will be in Tech Garden and around 150 also in Chennai. That is what we are targeting based on the leasing which has been done. Any incremental leasing will also help in improving this number. As far as LRD potential is concerned, we have around 1,000 to 1,200 crores of LRD which can be done from these properties and from the other properties which are leased.
Okay. Just to clarify, sir, you are mentioning about INR 260 crores of total rental, based on the current leasing that has been done, versus about INR 55-INR 60 crores that you are getting right now. Correct?
This is based on the rent commencement which will have during the year. That is the numbers we have.
Okay, sir. Thank you. Thank you, sir. That's all from my side.
Thank you. The next question is from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.
Thank you for the follow-up, sir. My question is on the hedge now. We have to make payments of INR 1,000 crores for the rest of the nine months. The current net debt we have is about INR 1,500 crores. How do you see this ending up by the year-end?
See the repayment for next three quarters is around INR 284 crore. This number will be our debt, if you see our slide also, has been more or less constant. It has been more or less same. Our 81% out of that is commercial debt and out of that 73%-75% is rental debt. Obviously that will not come down. All the CapEx debt will convert into LRD into a more cost-effective debt. Definitely there will be reduction in residential. We have done around INR 52 crore this year as well. If the collection and the sale continues, definitely we'll try to reduce more.
I was saying how will you fund this INR 1,000 crore of land CapEx? That was my answer. Can you do it with your internal accrual or-
Cash and cash equivalents today also we are sitting on INR 1,600 crores. There's enough money where we can land it. Even QIP money of around INR 350 crores are lying with us. That is not an issue.
Yeah. Our net debt will go up. Basically you're saying you'll use free cash, so our net debt will go up. Gross debt may remain same, but net debt will go up.
Yeah, yeah. Net debt will not go up. It should come down. Yeah, of course, if we have a new commercial where we are going to launch some project, definitely some CapEx debt will be taken, otherwise residential right now we are not taking debt. I just want to correct that the QIP money which we have is around INR 250 crores.
Okay. Second question is on the active pipeline of 1 million sq ft on the commercial side. Can you break it up like, is it like larger deals and, like 0.2 million, 0.3 million or these are like multiple deals? Because what we hear from the market is there's a strong recovery in the office leasing segment. You still have about 1 million sq ft to lease. Just wanted your sense on that.
Like I said, these are in the pipeline, so hard to say what will actually get converted. The range of the request that we get is anywhere from what we see smaller spaces in North Bangalore ranging from around 20,000 to larger requirements in East Bangalore going up to say 100,000 to even 200,000, and couple of requests for even 400,000. I would say we are seeing smaller spaces being looked at in North Bangalore and larger areas being looked at in East Bangalore. I can't get into the individual breakup of the pipeline.
I was more specific about the BTG property. Is this out of this 1 million sq ft actual, how much will be like, attributable to the BTG properties?
Yeah. It's multiple clients, and typically what they look for is at least a floor. Floor could be anywhere or multiple floors are ranging again, like I said, from 40,000 to 120,000. That is a typical size of lease that we do.
Just lastly on these launches about INR 7.6 million in Resi and INR 1.94 million in lots.
Yeah.
Break it up quarter-wise like Q2, Q3, Q4. How will it be timed out, or phased out?
Hi. I just wanted to say of the number that you're seeing there, we have actually already launched 1.5 million sq ft within the past month itself. All of them came on during our Brigade Showcase, which our chairman had talked about. That's already launched in terms of Q2. The remainder of them will come into Q3 and Q4. We would like to aim for about 2 million sq ft-3 million sq ft in Q3 and the remainder in Q4. Of course, the exact timing will really depend on the pending permission, RERA approval and so on. This is what the team is entirely geared towards making sure that it happens.
There's nothing from Chennai in this, right? Because you said the INR 2 million will come in from Chennai next year mostly.
Right. No, there is one project in Chennai. It is actually part of our World Trade Center project.
Okay.
It's a very small project. It's really only like 45 rooms, which is something that is just included there. It won't add too much to the overall area in terms of the launches.
Thank you. Thank you, Pavitra. Thanks for your time.
Thank you. The next question is from the line of Pritesh Sheth from Motilal Oswal. Please go ahead.
Hi. Thanks for the follow-up. Just one bookkeeping question. If you can provide the makeup of collections. I think residential was INR 861 crore which you highlighted. What about the rest of the business?
Residential was INR 867 crores. Commercial sale was INR 14 crores. Commercial lease was INR 126 crores. Retail was INR 49 crores. Hospitality INR 105 crores. Our maintenance services were INR 49 crores. That totals to INR 1,210 crores. Sorry, INR 121 crores. INR 1,210 crore.
Yeah. Thank you. That's it from my side.
Thank you. The next question is from the line of Siddhant Dand from Goodwill. Please go ahead. Siddharth Arya, your line is still unmuted. Please go ahead with your question.
Hi. My question is on the 36 million sq ft of land bank that you have, what is the value on our books? Could you share the market value if possible?
The market value is difficult to assess. We have not got into that exercise. It is definitely superior than what is the acquisition rate. The breakup is given, I think. Breakup will again be mentioned.
Okay. The cost of land that you've given in the presentation and it has appreciated. It's definitely not depreciated over.
Yeah. Yeah.
Okay. Okay.
Thank you. As there are no further questions from the participants, I now hand the conference over to Ms. Pavitra Shankar, Executive Director, for closing comments.
Thank you everyone for your patience and listening in as always. We'd like to close the earnings call with a few other highlights from the group. As part of our CSR activities, we've commenced work on a 120-bed hospital at the 60 acres Brigade Meadows Township on Kanakapura Road in Bangalore. This initiative will contribute significantly to the healthcare needs of South Bengaluru. The aim is to reach out to a wider section of society and make quality healthcare available to the common man at affordable cost. Further in line with our focus on community development, the Brigade Foundation announced its partnership with GoSports Foundation on the Equal Hue Cricket Excellence Programme, which was conceptualized to support and empower young women aspiring to make a professional career in cricket. The foundation will be an associate partner for the three-year term program, donating INR 50 lakhs per year.
To commemorate the finale of the Birdsong Exhibition, the Indian Music Experience Museum or IME, founded and supported by Brigade, presented a concert entitled Wings of Melody, featuring an ensemble of noted classical musicians from across the city. This was a culmination of a four-month series of public programs featuring award-winning photographs, interpretive panels, audiovisual kiosks and computer interactives. Birdsong was visited by over 20,000 people since April 2022. On the tech front, our accelerator program, Brigade REAP, has completed six years. 11 cohorts have graduated, and the startups now have a combined valuation of $150 million. 40% of these startups are in the sustainability space and will help the real estate industry build in a sustainable and responsible manner. They will also play a role in helping various developers achieve their ESG goals.
Over the last two months, a proud moment for us was when Brigade El Dorado received the prestigious Pradhan Mantri Awas Yojana award under the Affordable Housing Project at the FICCI Empowering India Awards 2022. We consider this award as a recognition of the best practices we follow right from the conception stage of it on paper. We also won The Economic Times Real Estate Awards South. Brigade Orchards won Best Residential Project Township. Brigade Xanadu won the best theme-based project. Brigade Atmosphere for best villa project. Finally, our chairman, Mr. M. R. Jaishankar, was recognized as Realty Personality of the Year. On that note, we'd like to conclude the Q1 FY 2023 earnings call. Stay safe and stay healthy. Thank you.
Thank you. On behalf of Brigade Enterprises Limited, I conclude this conference. Thank you for joining us, and you may now disconnect your lines.